As governments around the world look towards recovery from Covid-19, many will be considering how to keep global warming well below 2 °C while ensuring affordable and sustainable energy access for growing populations. This will require transforming the way electricity is generated, managed and delivered. With urban areas responsible for two-thirds of global final energy consumption and local governments showing immense climate ambition, cities provide the missing link. This new Coalition for Urban Transitions paper builds on previous research on the ‘3D’ transition of the power sector. This earlier research used 10 city case studies to argue that decentralisation of power systems in urban areas, aided by digitalisation, provides new options for national governments to decarbonise electricity. Building on this earlier analysis, this paper outlines the critical need to incorporate local governments in national efforts to decarbonise the power sector. Such collaboration is essential for the ultimate success of both national and local policies. The paper indicates how local government policies can help complement and accelerate a nationally led 3D energy transition. These could include reforming local regulation so new technologies can be more easily rolled out, investing in local renewable energy infrastructure and helping urban communities have their say on decisions. It also highlights the importance of national policies to support and enable local governments to play these roles.